Feds need to work harder to crack down on EI overpayments: auditor general

OTTAWA — The auditor general says Ottawa is overpaying employment insurance by at least $300 million a year, and fails to get millions of it back.

The Conservative government has taken a beating in recent months for what critics say is an overly aggressive approach to policing EI, including sending public servants door-to-door to check up on recipients.

In his spring report, Michael Ferguson says the government needs to do even more to make sure it prevents, finds and recovers overpayments so the program stays fair.

Human Resources and Skills Development — the department responsible for EI — identified $295 million in known overpayments in 2011-2012, with about $110 million lost to fraud.

Meanwhile, the auditor general found the federal government is currently owed $662 million in clawbacks from cases stretching back more than two years, but was doubtful two-thirds of it will ever be recovered.

The department says it’s planning an analysis of overpayments and their impact on the system by the start of next year and will have a plan by next summer.

In 2011-2012, the government recovered $311 million in overpayments, interest and penalties and gathered a significant amount of information about how that money was returned, the report found.

It is important the department uses that data to understand which cases offer the highest potential for returns, Ferguson said.

“By improving its analysis and understanding of overpayments, Human Resources and Skills Development Canada could potentially identify more overpayments and improve on recoveries,” he said in a news release.

In 2011—12, the department processed 2.9 million claims and paid out $16.1 billion in benefits.

While the government knows it overpaid $295 million, it also recognizes that it hasn’t yet identified all the mistaken payments. Estimating those could be worth as much as $578 million, the report found.

The failure to get money back can be pinned on several factors, including case backlogs, writeoffs and the expiry of the statute of limitation on collections.

About 36,000 high-risk cases, representing as much as $20 million, were set to expire by the end of the 2011-2012 fiscal year without ever being fully investigated because they’ve passed the six years available to the government to collect overpayments.

“Human Resources and Skills Development Canada takes its responsibility seriously to ensure that overpayments related to the employment insurance program are effectively addressed,” the department said in the report.

Ferguson’s report, released on the annual tax-filing deadline, also found the taxman is struggling to keep up with Canadians who don’t pay their taxes.

The amount of unpaid tax debt has climbed by $10 billion, to $29 billion, in the last seven years — despite redoubled efforts by the Canada Revenue Agency to track and collect the money.

The agency says the 2008 economic meltdown drove up the amount of unpaid tax arrears because of personal and corporate bankruptcies, among other factors.

Ferguson gives the agency a mixed review for its collection efforts, saying much-needed work has been done since a highly critical report in 2006 on the tax-debt problem.

But the agency is also slow to implement improvements, with its proposals from 2008 not scheduled to be implemented until next year.

The taxman is also facing a key deadline next March, when it will no longer be able to collect most tax debts older than 10 years. The deadline is the result of legislation passed in 2004.

Ferguson’s report says the Canada Revenue Agency won’t have a systematic solution to chasing those older tax debts until late in 2016, more than two years after the 10-year expiry date.

The agency has also recently come under fire from critics for not aggressively pursuing Canadians who dodge the taxman by hiding their money in secret overseas accounts.

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Jay

May 01, 2013 - 07:27

EI money comes from employers and employees. The Federal government doesn't put one cent into the EI fund. As a result they should be removed from having any say into how it is spent . Over the years the Fedferal government squandered a huge EI surplus, which they treated as their own and used for political purposes. In order to fix the situation, a Federal/Provincial, employer/employee group must be organized to properly manage the EI account. Please, get it out of government's hands. It has become nothing but a slush fund and political tool for whomever is in power.

I think the government will spend our monies more wisely by looking at a major over haul of our social assistance and welfare programs. As a middle class working stiff I am extremely sick of having to subsidize these grossly abused programs. Boy are all these people lucky I am not in a position to drive change. If you continue to attack the working class where will that leave us as a society. I am starting to believe in the old adage if you can't beat em join em. What happens if we (the working class) all start thinking that way? Who's gonna pay to fund all these programs then?

Perhaps the govt should conduct a review of the welfare system as well and see how much of that shouldn't be paid out in the first place. The amount of people who receive that when they are quite capable of working is disgusting.

And the sad thing is that it's not even a secret! A former co-worker of mine explained to me how all her friends worked the EI "everybody in the family's a fisherman" scam. This wasn't just one or two families that she was talking about! Many of her friends had actually said to her that they couldn't understand why she'd actually bother to go out and get a job!